Challenges to Digital Transformation - Fergal McHugh Interview

Challenges to Real Digital Transformation

Digital transformation is no longer a simple once off journey, it is a continuous transformation of business operations and culture. It is important for businesses today to understand digital transformation and what they can do to excel in today’s market. Today we interviewed our Head of Strategy - Fergal McHugh. Fergal is responsible for overseeing Arekibo’s innovation and growth strategies. He also works with Arekibo’s customers in Ireland and Europe, advising them on how to integrate and scale digital innovation into their organisations. You can read what he had to say below...

1. What is digital transformation in simple terms?
2. Why is digital transformation so important for businesses today?
3. Is digital transformation equally important for all types of businesses and industries?
4. If businesses are aware of a need to digitally transform, why, in your opinion are so many organisations struggling to get going with business change?
5. What do you believe are the most important elements when it comes to digital transformation?
6. If there were some key pieces of advice you would give to a client before they embark on a major digital transformation project, what would it be?

1. What is digital transformation in simple terms?

Digital transformation is about using digital technology to transform the way one does business. In practice, it is about taking what you already know about your business – its goals, and what success means – and expressing that knowledge using a new vocabulary and new concepts. What makes it transformational is that, done well, something new is created. It is not simply the old model and technology. Successful digital transformation involves understanding how a business strategy with digital integrated into its DNA is a better strategy. It will be stronger and more flexible. It will have considered, strategic aims and a means to achieve and measure them. From a practical, day-to-day perspective, digital transformation is about gradual, collaborative change. This change takes place at all levels of the organisation. It requires constant communication, negotiation and embedding. For this reason, the best digital transformation strategies are not overly prescriptive, they are not over-engineered. Their role is to guide and focus, but not dictate.

2. Why is digital transformation so important for businesses today?

Digitalisation within an organization is not something optional. What is optional is how you do it. This is where the idea of a transformative approach comes in. Recently a management consultant that I was collaborating with remarked to me that many of the firms who were talking about innovation are now talking about transformation. There is a reason for this. It’s not that innovation and transformation are mutually exclusive - it is more that firms have realized that the don’t need to begin digitalization from scratch. There are capabilities, systems and knowledge already in place, they just need to be transformed to have the impact we want them to have. On way of thinking about this is as transformation as being a more efficient way to digitalise.

3. Is digital transformation equally important for all types of businesses and industries?

It is equally important, but some types of business are doing better than others. B2C firms have been forced by necessity to digitalise. By contrast firms in the B2B space have, historically, been under less pressure, specifically in digitalising their sales and marketing capability. But that is changing now, B2B buying patterns are changing — digital has become an essential touch-point in the customer acquisition process and firms need to evolve. The net effect is that B2B organisations have a lot more work to do.

4. If businesses are aware of a need to digitally transform, why, in your opinion are so many organisations struggling to get going with business change?

I think that organisations struggle with change generally — they are made up of people and people are creatures of habit. A related issue is that change is hard, especially when you consider the extent of the change required. Digital transformation can appear daunting. One of the approaches we take is to make change more digestible – this means a different approach to how digital programmes and projects are managed. Digital transformation targets an iterative approach, setting down broad strategic goals and working toward them in manageable chunks. This approach manages risk, enables learning as the programme proceeds and when down ensures continuous success so that you are always strictly better off than you were, no matter where you are in the programme. You are not waiting for that big bang.

5. What do you believe are the most important elements when it comes to digital transformation?

I think the most important principle is getting the balance right between strategic goals and tactical effectiveness. This is not a trade-off, rather it’s a negotiation. I talked before about breaking a programme down into manageable chunks. It is crucial to make sure that these chunks are not just short-term tactical. Some programmes are more focused on appeasing stakeholders than making real progress. One of the symptoms here is an over emphasis on deliverables rather than outcomes. This is also, quite often, a product of traditional project management approaches still embedded in the organisation. Programmes like this can easily grind to a halt with offering much value to the business. Measurement has a crucial role to play in breaking potential deadlocks — is what we are doing effective? Are the outputs of the programme getting us further down the road toward our strategic goals? We need to be asking ourselves these kinds of questions and responding to them as the programme develops.

6. If there were some key pieces of advice you would give to a client before they embark on a major digital transformation project, what would it be?

While it is crucial to have overall strategic goals which are well understood by everyone involved there is also a mistake that runs in the opposite direction — deciding too much in advance. Given the challenge of a major project my first question is what could be carved out as a means of getting the project started that involves neither the capital or reputational risk of a major programme. Target an outcome that makes strategic sense, that you can get stakeholders behind and that can be assessed against clear criteria for success and then iterate. When something major is in play the best way to ensure success is to ensure that it is manageable.

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